Ushering in the Timber Age: Economic & Sustainable Opportunities for the 21st CenturyPrepared for Northeast Wood Design SymposiumBy Frank Lowenstein, Chief Conservation Officer, New England Forestry Foundation

Disclaimer: This presentation was developed by a third party and is not funded by WoodWorks or the Softwood Lumber Board.

“The Wood Products Council” is a Registered Provider with The American Institute of Architects Continuing Education Systems (AIA/CES), Provider #G516.

Credit(s) earned on completion of this course will be reported to AIA CES for AIA members. Certificates of Completion for both AIA members and non-AIA members are available upon request.

This course is registered with AIA CESfor continuing professional education. As such, it does not include content that may be deemed or construed to be an approval or endorsement by the AIA of any material of construction or any method or manner of handling, using, distributing, or dealing in any material or product.

______________________________Questions related to specific materials, methods, and services will be addressed at the conclusion of this presentation.

Building owners and designers have a unique opportunity to help address the significant environmental and development demands placed on the built environment by the twin needs to expand housing and address climate change. At a moment when the built environment is facing dramatic shifts, the need for innovation and sustainable design approaches is more essential than ever. This session will outline current research on how forests can link to cities through demand, design, technology, supply, and sustainability. Topics will include: a summary of the latest climate science, energy efficiency, the importance of local sustainability criteria and sourcing, and technological opportunities associated with mass timber methods of construction.

Course Description

1. Participants will understand the urgency of addressing climate change, and the challenges inherent in providing buildings for housing and economic needs in the face of climate change.

2. Participants will understand the three carbon reduction possibilities inherent in mass timber construction: offsets, sequestration, and urban form.

3. Participants will understand how reductions in greenhouse gas emissions associated with mass timber construction depend on sourcing and sustainability issues in the forest that provides the timber.

4. Participants will be aware of the how to maximize the benefits of mass timber’s use in urban buildings, performing triple functions of structure, finish and carbon sequestration.

Learning Objectives

NEFF’s Mission

Through the application of our core expertise in conserving forestland and advancing Exemplary Forestry, New England Forestry Foundation (NEFF) helps the people of New England to sustain their way of life, protect forest wildlife habitat and ecosystem services, and mitigate and adapt to climate change.

Objective 1. Urgency of addressing climate change

IPCC report, October 2018

It’s the diagnosis you don’t want from your doctor:

“Every possible test has been done and the news is not good”

--Katherine Hayhoe, Texas Tech University

Report accessible at https://www.ipcc.ch/site/assets/uploads/sites/2/2019/05/SR15_SPM_version_report_LR.pdf

Science of the report• Report indicates 1.5°C of

warming could occur between 2030 and 2052

• High probability of limiting emissions to 1.5°C requires net zero carbon emissions by 2040

• High probability of avoiding exceeding 2°C requires net zero emissions by 2055

“Unprecedented”• Achieving the emissions targets

requires unprecedented reductions in carbon emissions

• No industrial economy has ever sustained this scale of reductions for such an extended period of time

• Reductions in wealthy nations will likely have to be faster to achieve these goals, in order to accommodate just poverty alleviation and economic development goals in nations still experiencing widespread poverty

Impacts of 1.5 vs 2°C• IPCC report and other

economic analyses indicate strong economic losses with change from today’s temperatures to 1.5°C, and more losses with to 2°C

• Current policies are not sufficient by far to meet even a 2°C goal

• Temperature rise of 3.66°C would increase economic damage nearly 10 fold vs 1.5°C

Source: https://climateactiontracker.org/publications/time-to-boost-national-climate-action/

Economic development needs are not just a developing country issue

“The Metro Mayors Coalition will need to add 185,000 housing units from 2015 – 2030 in order to meet demand and reduce – or at least stabilize -- housing costs.”

Recommendations in the IPCC report

• Cut concrete emissions– but only by using carbon capture and storage.

• Plant up to 2.5 billion more acres of forests by 2050– but little focus on retention or management of existing forests

• Rapid transformation of urban infrastructure including deep reductions in energy use in buildings– but only focused on operational energy

• Carbon pricing of up to $5500 per ton of CO2 needed by 2030–equivalent to 5x to 10x the going per acre rate for Maine forest land.

We can do better than this!

Objective 2: The Climate Potential of Mass Timber Construction

What’s not in the report: A three part climate solution

Ending Forest

Conversion to maintain CO2 already

stored

Exemplary Forestry to remove and store more

CO2

Wood buildings to

reduce emissions and

store more CO2

A New Climate Wedge

Articulating that approach in print:https://www.nytimes.com/2019/10/03/opinion/wood-buildings-architecture-cities.html

Part 1. Stop conversion of forests to other uses

Whether for agriculture in the Amazon or for homes near Amherst deforestation releases carbon already stored and eliminates future potential to store more

Video still from NY Times. https://www.nytimes.com/video/world/americas/100000006721982/amazon-rainforest-fires-burning.html

Part 2. Manage forests betterPotential to address climate change through improved forest management on existing forest lands• Higher stocking and

productivity• Addressing non-carbon

effects of forest on albedo, water vapor and other critical climate variables

Photo by John Brissette, Northeastern Research Station

Potential benefits are enormous• Achieving exemplary forestry

outcomes in New England would store 1.9 Gt of CO2 in new living wood.

• If achieved over 20 years this equals would be equivalent to removing all vehicles in New England from the roads for the same time period or longer.

• Production of sawlogs could increase.

Part 3. Build wood buildingsLower emissions

Sequestration in the building

Different pattern of development

Courtesy of John Horner/RISD

From carbon source to carbon sink.About 5000 tons C02 emissions avoided.Typical mass timber mid-rise building

Rendering, façade detail.SHoP Architects, NY, NYFrom Timber City exhibit

Additional long term storage of carbon in the structure itself

Brock commons at the University of British Columbia:

• 1753 metric tons CO2 stored in the wood of the building

Photo courtesy of UBC

Change the pattern of development

• Switch from 5 over 1 wood frame around transit hubs to 6-12 story mass timber housing.

• Less forest clearing on urban fringe

• Less congestion and transit emissions

Objective 3: Carbon benefits depend on sustainability of harvesting

• Oliver et al 2014: 14 to 31 percent of global carbon emissions

• BUT– presumed harvesting limited to growth on annual basis

• Currently in Maine harvesting on some investor-owned lands greatly exceeds growth creating a carbon debt

Sustainable sourcing is key for the future of mass timber• Third party certification is a minimum step• LCAs need to include in-forest impacts in a meaningful

manner• Sourcing requirements can help drive desirable outcomes in

the forest• NEFF’s Exemplary Forestry standards represent one

articulation of a higher sustainability standard

Potential Results for Mass Timber• Forest products at the center of climate-driven development• More jobs in depressed rural communities• More housing, with more affordable pricing• Improve mobility and reduce future sprawl• Maintain wildlife habitat, clean air, clean water• Help solve the climate crisis

Objective 4: What’s needed to makeCLT work here in New England?

Build SupplyBuild Demand

CLT Supply Potential

U.S. Forest ServiceWood Innovations Grant

Pöyry Global

Innovative Natural Resource Solutions

ASSESSING THE WOOD SUPPLY AND INVESTMENT POTENTIAL FOR NEW ENGLAND ENGINEERED WOOD PRODUCTS MARKETS AND MILLJuly, 2017

CONSTRUCTION MARKET – U.S. NORTHEASTCommercial and taller residential buildings provide the largest new opportunities for wood.

1009080706050403020100

0 10 20 30 70 80 90 100

%

40 50 60Market size by square feet, %

• Single-Family• Multi-Family• Colleges• Health• Offices• Schools• Industrial• Public• Stores• Other

SHARE OF SEGMENT THAT USES WOOD

NEW ENGLAND FORESTRY FOUNDATION PROJECT X325305 | JULY 2017

Single-family market is wood product-saturated.

Room for wood.

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

Mill

ions Others

Public

Health

Colleges

Schools

Offices

Industrial

Stores

Multi-family

Million ft3

1% market share for CLT in NortheastLarge projects from both private and public sector would accelerate the demand relatively quickly.

400-500 apartments

3 bigger shopping malls

2 CLT mills?

1 U of M, Amherst project or ~200 dorm rooms

2-3 big projects

2-3 schools (Franklin Elementary, VW)

CLT – INTERNATIONAL COST COMPARISON

02468

1012141618

New E

nglan

d, ME

Illino

is

Orego

n

Montan

a

British

Colu

mbia

Quebe

c

Sweden

German

yLa

tvia

Delivered costs of CLT

Transport to BostonOtherGlueElectricityPersonnelLumber

USD/ft3

When taking into account transport costs, the costs of New England are on par with or better than competitors for delivery to a construction project in Boston.

PROFITABILITYSales prices have to be clearly above the cost of import at current $/€ exchange rate to justify a greenfield investment. Integrating CLT production with an existing glulam factory is an attractive opportunity even with current import parity price.

IRR %

Local pricing 15.1%

Import parity price 2.9%

Brownfield integration * Local pricing 40.3%

Brownfield integration * Import parity price 14.9%

*Existing building and infrastructure, existing lamella production, investment 7 MUSD investment in manual technology (+50% production & maintenance personnel) and modifications of buildings

IRR sensitivity

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

-20% -10% 0% 10% 20%

IRR

(%) Production volume

Sales price

Wood cost

Manufacturing cost

SENSITIVITY ANALYSIS – LOCAL PRICING SCENARIOThe project will have a positive net present value given a local pricing scenario for reasonable fluctuations in sales price, and production volume and costs

• The internal rate of return will be positive under all reasonable circumstances, and vary between 5-25% given the change in input factor prices and costs

Driving demand– showing it’s possible

U. Mass –Amherst Design Building – opened in January, 2017

Photo by Alex Schreyer

Potential incentivesWood first/wood alternative policies

Public sector

Private sector

Public policies that would scale state aid for housing and/or schools based on climate impact

Investor-based strategies

Investment tax credits

Carbon credits

Recruiting climate-interested investors

Reducing interest costs based on climate benefits

Private sector strategies to drive sustainability and conservation through sourcing requirements

Forests to Cities:Grow, Build, Live

Forged from photosynthesis

.

Photo: Wildlands and Woodlands, Harvard Forest

This concludes The American Institute of Architects Continuing Education Systems Course

QUESTIONS?

Frank Lowenstein

New England Forestry Foundation

flowenstein@newenglandforestry.org